First domestic agricultural futures price insurance policy signed in Dalian
Recently, the signing ceremony for the first domestic agricultural futures price insurance policy was held at the Dalian Commodity Exchange in Liaoning. PICC P&C Dalian Branch signed corn and egg futures price insurance contracts with an agricultural cooperative in Yi County, Jinzhou City, Liaoning Province, and with an egg farmer in Dalian, with the first policy covering 1,000 tons of corn and 300 tons of eggs. This is the first agricultural futures price insurance policy in China.
At present, China is accelerating the reform of the agricultural product pricing mechanism, exploring the decoupling of the agricultural product price formation mechanism from government subsidies, and changing the grain price determination mechanism based on the government's minimum purchase price and temporary storage price. Through the insurance product innovation of “insurance + futures”, the original methods of transferring agricultural product price risk and of state subsidies for agricultural products can be changed. In addition, agricultural futures price insurance is also a technical upgrade of traditional price insurance products. By using the futures market to undertake and transfer agricultural product price risk, it makes up for the mechanism defect of traditional price insurance, which cannot transfer risk, and can rapidly expand price insurance to a variety of bulk agricultural products and agricultural by-products, achieving scale in risk diversification.
In March of this year, the Dalian Bureau of the China Insurance Regulatory Commission proposed the idea of advancing agricultural futures price insurance, and jointly launched the research project “Research on the Theory and Practice of Agricultural Futures Price Insurance” with the Property Insurance Supervision Department of the China Insurance Regulatory Commission and PICC Property and Casualty Company Limited. PICC P&C dispatched experts to be stationed in Dalian, and from preliminary market research to the pilot launch of the product, the whole process took less than 4 months, finally completing the product's market launch before the corn harvest season. Cai Xingxu, Party Secretary and Director of the Dalian Bureau of the China Insurance Regulatory Commission, said that the research and exploration of agricultural futures price insurance stemmed from in-depth thinking on implementing the strategic deployment of the Dalian Municipal Party Committee and Municipal Government to plan the “two pioneering areas” and from the overall arrangements of the innovation year activities. By promoting deep integration and innovation between the insurance industry and the futures industry, and using the combined force of finance to boost the real economy, efforts are being made to build Dalian into a national demonstration zone for agricultural and fishery insurance innovation.
In addition, PICC P&C signed a strategic cooperation agreement with the Dalian Commodity Exchange, and PICC P&C Dalian Branch signed a cooperation agreement with Xihu Futures Company. Lin Zhiyong, Vice President of PICC Property and Casualty Company Limited, said that PICC P&C will draw on its years of experience in agricultural insurance, give play to its advantages in full-process operations including underwriting, claims handling, capital utilization, and compensation, effectively integrate sales outlets and futures market resources, and provide farmers with standardized, simple and easy-to-understand futures price insurance products. Through the integration and innovation of various financial tools in the insurance field, it will achieve the leap of insurance products from protecting costs to protecting returns. Feng Bo, General Manager of the Dalian Commodity Exchange, also said that futures and insurance can leverage their respective advantages and cooperate closely to help farmers effectively cope with the risk of market price fluctuations. Next, it will continue to support and promote the futures industry and insurance industry in exploring and establishing a sustainable and replicable model for agricultural futures price insurance, ensuring the smooth implementation of China's agricultural product price strategy.